Jamie McGeever
Orlando, Florida (Reuters) - Trading Day
Cautious stability
World markets have made solid foothold deals this week as the Trump administration makes its first “dozens” deals in the coming weeks as investors cheer in the U.S.-China trade talks held in Switzerland this weekend.
The S&P 500 and Nasdaq returned to their position on April 2, recovering 15% losses in the days following Liberation Day when Trump announced his reciprocal tariffs, Germany's DAX was at a new high, and Japanese stocks locked down their best once-weekly once in two years.
A range of stimulus measures from China, including lower interest rates and liquidity injections, have boosted people's mood. The Bank of England also lowered interest rates, and the Bank of Japan appears to have put its tightening cycle on the ice. Although the Fed has not relaxed its policies, the market knows where they are - stability may also be reassuring.
In terms of earnings, 450 companies listed on the S&P 500 reported first-quarter results. According to IBES/LSEG analysis, although negative forecasts for the second quarter exceeded nearly 50%, the earnings growth volume was about 14%.
Be cautious, at least in the U.S. market. Despite the wave of trade optimism, Wall Street and the Treasury output changed slightly this week. It also reminds investors how unstable and unpredictable the U.S. government is - President Donald Trump and Vice President Judd Vance updated the attack on Fed Chairman Powell, who Trump said 80% tariffs on China seemed to be correct, and the White House later said he "threw out there."
Once dust is reached and deals are reached, the tariffs will be lower, and perhaps much lower than the proposed April 2 tariffs. But the truth is, they will be much higher than before Trump took office.
As economist Phil Suttle pointed out, tariffs have not bite people, but they will. He estimates that the average effective U.S. U.S. tariff rate will reach about 22%, a fourfold increase from when Trump took over. Goldman Sachs economists point out that despite the resilience of “hard” data, the economy is on a “cliff of slowing activity.”
So for investors, it depends on the starting point. Are you relatively bullish because tariffs won't be as high as April 2, or are they relatively bearish because they will be much higher than Trump's previous one? With such high uncertainty and such low visibility, the current swap may be appropriate.
Now everyone's eyes turn to Geneva, and the U.S. delegation led by Finance Minister Scott Bessent will conduct trade negotiations with the Chinese team led by the Economic Tsar his Economic Tsar. Monday's market can be very interesting.
I would love to hear from you so please contact me in my comments. You can also follow me on @reutersjamie and @reutersjamie.bsky.social.
Major market transfers this week
*Wall Street's three major indexes, MSCI's world and Japan benchmarks, closed on Friday within 0.5% a week ago. Stability on disturbances of the surface mask under the hood? *Germany's Dax sets a record. The index rose 18%, up 27% from the April 7 Liberation Day low. *The US high-yield credit gap is in its fifth week, and Arun has not seen it in two years and has returned to 350 basis points. * Since February, Bitcoin has risen by nearly 10% to $100,000.
Weekly Picture
Remember Elon Musk and Doge? Billionaire Tesla CEO and owner of social media platform "X" was brought into the Trump administration in January to hype and promised to bring chainsaws to federal spending and lower the budget deficit. Touting ultimately cuts $2 trillion.
It is safe to say that his initial efforts failed to achieve these lofty goals, and Musk took a step back from the perspective of the crowd. Those goals look increasingly out of reach as Republicans prepare to complete Trump's fiscal plan next week.
The early days of the Trump 2.0 administration showed that spending was not ruled at all. In fact, it is higher than what Biden gave.
Morgan Stanley economists said this week that they expect the budget deficit in 2026 to be 7.1% of GDP, up from 6.7% in 2025. This will add about $310 billion. Such figures may upset investors and put down pressure on the long-term treasury.
Here are some of the best things I read this week:
1. There is no point in why it is necessary to weaken the US dollar contract. 2. The Magragu agreement could undermine the USD 3. "Global South" - "Global South" - A strategic approach, a strategic approach worldwide.
Can the market be transferred on Monday?
*Response to the U.S. in Geneva - China trade negotiations *Response to China's inflation data on Saturday *Inflation in India (April) *Japan Trade, Current Account (March) *Bank of England Megan Greene, Clare Lombardelli, Catherine Mann, Catherine Mann and Alan Taylor
The opinions expressed are the opinions of the author. They did not reflect the views of Reuters News, which is committed to integrity, independence and freedom from prejudice under the principle of trust.
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(Jamie McGiver